Answer:
The amount needed to pay off the loan after 4 years is $70,192
Step-by-step explanation:
When interest is compounded annually, total amount A after t years is given by:
[tex]A = P(1 + r)^{t}[/tex]
where P is the initial amount (principal), r is the rate and t is time in years.
From the question:
P = $60,000
r = 4% = 0.04
t = 4
[tex]A = 60000(1 + 0.04)^{4} \\A = 60000(1.04)^{4}\\A = 60000 * 1.16985856\\A = 70191.5136\\A = 70192[/tex]
The amount needed to pay off the loan after 4 years is $70,192
If we divide the amount by four, we will get the amount that is paid yearly (70192/4 = 17548). $17,548 is paid yearly.
